The question of whether to buy a new or used car plagues every motorist. But when you’re retired, this question takes on added weight. That’s because retirees have financial and personal considerations that are different from those of younger drivers who are still working and commuting.

Buying a used, or slightly used, car can be appealing because it’s usually cheaper and therefore more affordable than a new one. However, new cars have a lot to recommend them – namely, that they are less prone to breakdowns and usually protected by a warranty if they do experience problems. Here are five things for retirees to consider before they go car shopping. (See our tutorial The Complete Guide to Buying a New Car and Car Shopping: New or Used?)

1. Total Cost of Ownership

You may get a better deal on a secondhand car than on a new one, but the purchase price is not the only cost of a vehicle. You also have to factor in repairs, maintenance, insurance and gas. A new car is less likely to need repairs and is more reliable than a used one. New cars are also more fuel efficient, and insurance on a new vehicle is typically lower.

However, monthly payments on a new car come with interest rates, and over a period of 48 or 60 months, those payments add up. Consumer Reports calculates that the median new car in the U.S. costs more than $9,100 annually in the first five years of ownership when you factor in monthly payments, interest, insurance and gas. And, while a new car is less likely to need repairs, it still requires general maintenance. When you consider the total cost of owning a brand-new vehicle, it might be more practical to buy used – especially if you can pay for the car in cash.

2. Warranty Coverage

Warranty protection saves precious dollars and can provide retirees with peace of mind, knowing that they won’t be on the hook for a big bill should something go wrong with their car. Consumer Reports found that the annual maintenance costs for a vehicle can increase five times once it is no longer under warranty. That's significant. New cars, of course, are protected by a comprehensive manufacturer’s warranty. If anything happens to the vehicle, it will be repaired at no additional cost. (See 5 of the Best Auto Warranties for more.)

Keep in mind that many secondhand vehicles also come with warranty protection. Low-mileage, certified pre-owned cars that are less than four or five years old are typically still under warranty, and you can often purchase extended warranties on them. They also tend to be more affordable than new cars, as much of the depreciation has been taken off the price. Should You Buy a Certified Used Car? will give you details. Also, many used car lots will offer a six-month or one-year warranty on the secondhand cars they sell – even those that are more than five years old, have a lot of miles and are way past the manufacturer’s warranty period.

3. Trade-in Value

Unless you're planning some serious road trips, it's unlikely that you will drive as much in retirement as you did when you were actively working, especially if you had a daily commute by car. This means that the miles you put on your newly acquired vehicle are likely to be lower, which will help retain the car’s worth and trade-in value. Should you decide to sell or trade in a relatively new car, it’s likely to be worth more than a secondhand car that has already incurred significant depreciation.

If you take care of your vehicle and keep up with needed maintenance, you may still make some money on an older car. Plus, you don’t have to sell or trade in a vehicle at a dealership or car lot. You can always sell it yourself, privately. Websites like Autotrader and Craigslist, for example, let you list a vehicle for sale. Determine your car’s present value first by checking it against the Kelley Blue Book. (You may also want to read Top Tips for Buying or Selling a Car.)

4. Favorable Rates

Buying a new car may be more attractive if you don’t have the cash on hand to to pay for it and you’re considering financing the purchase through a bank or other lender. The reason: Interest rates are more attractive on financing the purchase of a new car. That’s because banks view used cars as less reliable and more of a financial risk.

However, if you have access to a low interest home equity line of credit (HELOC) – or you can arrange financing through the dealership where you purchased the car – it might make sense to purchase a less expensive used car. The key is to calculate how long it will take to pay off each vehicle with the interest rate factored in. (The interest rate may be a little higher when financing a pre-owned car.) If you can pay off a used car in 30 months, versus 60 months for a new car, it might make more sense to buy the secondhand model.

5. Latest and Greatest Features   

New cars come with new features. And automotive manufacturers add more impressive ones all the time. Sure, many of the features in cars today are designed for comfort and may seem frivolous. But a number are designed with safety in mind. Increasingly, safety add-ons, such as rearview cameras and lane departure warnings, are standard in cars. These features may be especially appealing to retirees concerned that their alertness and reaction times may be less than in earlier years.

Or, you may decide that, after working all your life, you deserve the car of your dreams with all the bells and whistles. After all, how many more cars are you likely to buy? If the new version is out of reach financially, you could explore a less costly, slightly used model that still has many of the features you desire. A 2013 BMW 3 Series car, for instance, has many things to recommend it. 

The Bottom Line

For retirees, there is more to consider than just dollars and cents when deciding whether to buy a new or used car. Weigh all the relevant factors. Think about how you plan to use the vehicle and how long you plan to keep it. Also consider your personal time and monthly budget. In the end, your choice should be about the money involved, as well as the experience you will have owning the vehicle.